If You Accept the Rational Expectations Hypothesis as Accurate, What

question 97

Multiple Choice

If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?

• A) Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.
• B) Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making.
• C) Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take.
• D) Only unanticipated policies will be effective once individuals understand how monetary policy works.

Identify the principles and criticisms of free market ethics as advocated by Milton Friedman.

Distinguish between different philosophies including utilitarianism, deontology, and the Ethic of Care.

Describe the characteristics, rights, and obligations of shareholders and benefit corporations.

Analyze the ethical considerations surrounding duty to rescue and exceptions to general principles.

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Definitions:

Microeconomic Analysis

The study of the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

Macroeconomics

The branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets.

Owner-Occupied Housing

Residential properties that are owned and occupied by the owner, as opposed to being rented out to tenants.

Housework

Housework encompasses the variety of tasks performed to maintain and manage the household, including cleaning, cooking, and laundry.